The Changing Face of the Beer Industry September 11, 2019 - IJC Licensing, Occupations, and Administrative Regulations presented by Kentucky Guild of Brewers 1
Kentucky’s General Assembly’s Work Continues to Yield Success Thank you! Your support and all of the legislative changes have • made our growth possible. We thank you for valuing our industry sector and standing up for the KY craft beer industry. Again, we are pleased to report another year of continued growth, • additional expansions, new brewers and increased economic impact, revenue and employment. The craft brewing industry has reached new levels of • competitiveness, not to mention the changes in both our market place and our customers expectations/demands. You have been our key ingredient for growth. It remains imperative to continue our efforts to modernize and advance our alcohol laws, improve our tax structure and avoid pitfalls of those seeking to keep everything as it has always been. 2
Kentucky’s General Assembly’s Work Continues to Yield Success Tremendous potential for growth still exists, especially here in • Kentucky. Kentucky remains an undersaturated state as opposed to several other states. Market demands for quality craft product continue to drive the opportunity for growth. Our focus remains on building our brands, assuring production of • quality product our consumers want and enhancing our customer services and tourism experiences. However, at the end of the day- our primary goal is the production of high quality craft beer. The craft beer industry is about creating synergies with each • other, industry partners, industry sectors, and our communities. That includes synergy with the General Assembly and policy makers to move Kentucky forward. An updated list of craft brewers across the state and samples of • the positive media coverage on KY craft beer and our breweries is attached in your packet. 3
Craft Beer Industry Nationally Small Independent American Craft Brewers Contributed Over $76.2 Billion to the U.S. economy in 2018, up from $55 • Billion just two years ago. The craft beer industry supports more than 500,000 jobs. • 2018 Craft Beer “Retail” Sales were $27.6 Billion of the overall beer market and saw an increase of 7% in sales growth. • Craft beer sales account for 24% of the nation’s $114.2 Billion beer market. While overall beer sales by volume in 2018 had a loss of 0.8%, craft beer had a 4% increase in volume • growth/production. According to the U.S. Department of Labor, wages in the beer industry remain among the highest of the 350 industries • surveyed. Demand for local products grew/increased 10% as • preferred products to consumers. Spiked seltzer, cans, crowlers and local craft beer all in demand and growing. Source: Brewers Association 4
Retail sales of alcoholic drinks by sector, % value breakdown, 2018 5
Kentucky’s Craft Beer: The Economics, Growth and YES MORE Expansions KY Craft breweries led the nation in 2018 for growth. KY craft beer • industry saw a increase of 43% growth, ranking in the leading top two states in the nation for industry growth and yet we still rank 41 st in number of breweries per population of adults 21+. We are growing more, investing more and producing more with a fewer number of breweries. KY has 69 active licensed craft breweries ( as of August 2019 ) . 16 new • breweries opened since our last Committee presentation. 11 known new brewery locations are currently in planning stages so far this year. There are 92 pending federal TTB applications from KY. Currently, 30 existing breweries have confirmed expansion activity . 42 % • of our existing craft brewers are already expanding operations. As reported to the Committee 2017, KY craft beer had an annual economic • impact of $495 million . In 2018, KY craft beer had a $657 million economic impact. So far in 2019, our mid-year data shows our economic impact has increased to $765 million. More KY craft brewers are exporting than in 2018. KY craft beer is now • sold to more than 45 states and over 25 countries, but our growth priority remains investment in the Commonwealth. Production numbers have also increased. • 6
Kentucky’s Craft Beer: The Economics, Growth and YES MORE Expansions- Continued KY Craft breweries have created 133 new jobs so far in • 2019. Employing over 1,000 Kentuckians. KY microbreweries have increased their workforce in 2019 of more than 15% . All offering KY tourism amenities such as tap rooms, 15 • brewers offer food, roof top experiences, farms or other amenities that draw visitors to our KY Microbreweries. KY Microbreweries have already invested $6.6 million • this year in the Commonwealth in expansions in the form of additional equipment, new tanks, canning lines, buildings, improvements and new brewery openings. Currently, of our known existing craft brewers that are • expanding operations, an additional $13+ million will be invested in Kentucky breweries and operations by the end of 2020. 7
Kentucky’s Craft Beer: The Economics, Growth and YES MORE Expansions- Continued What do we mean by expansions and improvements in Kentucky? A few examples include, but are not limited to: Country Boy Brewing - $1.9M for another expansion at the new • Georgetown Facility (additional land purchase, upgrades to the canning line, expanding the lab, adding additional warehouse space etc.) Braxton Brewery - $5M to purchase their NKY building, add a new • canning line, open a enhanced roof top facility and are in process of opening a new barrel aging facility in Ft. Mitchell. Do/Love/Live Brewery - $5M to convert an abandoned meat • distribution facility for its new barrel brew house, with food service and roof top facility and amenities over-looking the new soccer stadium. West Sixth Brewing - $1.1M for a new NuLu facility to restore a • 9,000 sq ft, 120 year-old carriage house. Goodwood Brewing Company- Expansion and new facility in • Frankfort. Hopkinsville Brewing Company also expanding. We could go on!!! • 8
Meet a New Brewer: Hopkinsville Brewing Company Kate Russell- Owner/Operator of Hopkinsville Brewing Company B.A., Psychology, Cornell University, 2003. Graduate certificate, Brewery Science & Operations, Auburn University, 2018. Military Service: Served as a signals intelligence analyst for the 101st Airborne Division (Air Assault); served in Operation Iraqi Freedom 2005-2007; assigned to FOB Speicher in Tikrit; reached the rank of Sergeant and received an honorable discharge in 2006. I am a Mother, Veteran and Brewer! Hopkinsville Brewing Company opened in September of 2016 Homeschooled my children in the brewery facility during build out. Beyond my initial investments to create this new business in Kentucky, I’m investing an additional $250,000 to buy the building next door and increase the breweries capacity I employee 12 additional people at my brewery. We have tap room sales and are distributing to other licensed retailers. The brewery is not just my passion, but my livelihood and how I provide for my family. 9
Kentucky’s Craft Beer Industry’s Other Contributions KY craft brewers expansions have continued to lead to the location, creation and expansion • of even more NEW support industries and indirect jobs now in the Commonwealth as well as enhancing our tourism experience. Have various industry partners such as our distributors, service providers, and partnerships • with KY Distillers. KY craft beer festivals yield a big draw and enhance tourism. • Attendance for our Annual Craft Bash was up 15% this year over last year. Over 1,700 visitors • attended the festival and came from 21 different states (as far as CO, CA & RI). Numerous craft beer festivals across the Commonwealth, to many to list them all.. • 2019 Kentucky Proud paired beer dinners include six scheduled Oct. 14-17 in various locations • across the Commonwealth. The dinners will consist of locally sourced foods matched with beers from the Kentucky Proud Beer Series and will also hold a KY Proud Beer Festival also featuring the special brews and locally sourced food items. Our brewers partner with the KY Department of Agriculture, KY Proud and our local farmers, • KY Tourism, Arts and Heritage Cabinet and Kentucky’s Economic Development Cabinet. KY Microbreweries have made over $500,000 in local charitable donations to their • communities. KY Brewers donate approximately 10 million pounds of spent grain to help our KY farmers. • 10
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